A millionaire is somebody with a net worth of at least $1 million. It's a simple math formula based on your net worth. When what you own (your assets) minus what you owe (your liabilities) equals more than a million dollars, you're a millionaire. That's it!
According to the Federal Reserve's 2022 survey, approximately 18% of U.S. households had at least seven figures net worth. That's roughly 23.7 million millionaire households across the country.
Key Takeaways
Yes, it's possible to retire on $1 million today. In fact, with careful planning and a solid investment strategy, you could possibly live off the returns from a $1 million nest egg.
The current state of Americans' 401(k) balances highlights significant disparities across age groups: Ages 21 to 34: 19.6% have less than $25,000 saved, while 32.91% report balances between $50,001 and $100,000. Only 10.76% have saved $100,01 to $500,000, and none have surpassed $500,000.
Americans in their 70s have an average retirement savings balance of $1,068,290; the median is $509,038, putting some 70-year-olds in the retirement millionaire bracket. Most Americans retire in their mid-60s and may start to see healthcare costs eating up a portion of their retirement nest egg.
Just 16% of retirees say they have more than $1 million saved, including all personal savings and assets, according to the recent CNBC Your Money retirement survey conducted with SurveyMonkey. In fact, among those currently saving for retirement, 57% say the amount they're hoping to save is less than $1 million.
With $1 million in a 401(k) and no mortgage on a $500,000 home, retirement at 60 may, in fact, be possible. However, retiring before eligibility for Social Security and Medicare mean relying more on savings. So deciding to retire at 60 calls for careful planning around healthcare, taxes and more.
A high-yield savings account can be an ideal place to keep money you are not using in the short term but that you want fairly easy access to. It offers higher returns than a traditional savings account and is low risk because your deposits are federally insured up to $250,000.
According to estimates based on the Federal Reserve Survey of Consumer Finances, a mere 3.2% of retirees have over $1 million in their retirement accounts. The number of those with $2 million or more is even smaller, falling somewhere between this 3.2% and the 0.1% who have $5 million or more saved.
Probably 1 in every 20 families have a net worth exceeding $3 Million, but most people's net worth is their homes, cars, boats, and only 10% is in savings, so you would typically have to have a net worth of $30 million, which is 1 in every 1000 families.
However, the state with the highest concentration of millionaires isn't California or New York – it's New Jersey, according to Statistica research published in August 2024. Yes, the Garden State has claimed the top spot, with 9.76% of its households worth $1 million or more.
The average millionaire in the United States is actually 61 years old.
Top 5% Threshold: This tier is a significant milestone, with a net worth requirement exceeding $3.8 million. This signifies financial accomplishment achieved through strategic planning and diligent wealth management.
Becoming a millionaire might seem out of reach for many Americans. Yet, for one age group, this reality is not too far-fetched. Indeed, people in their 50s have an average net worth of approximately $1 million, according to the Federal Reserve Board's triennial Survey of Consumer Finance.
Your net worth is what you own minus what you owe. It's the total value of all your assets—including your house, cars, investments and cash—minus your liabilities (things like credit card debt, student loans, and what you still owe on your mortgage).
For the foreseeable future, you won't find any banks that offer 7% APY on savings accounts. However, you can find some credit unions that pay 7% or more on checking accounts. Before opening an account, take a close look at the terms and conditions to determine whether you can earn the advertised rate.
Due to federal government protections, you're unlikely to lose money with a high-yield savings account, but you can take steps to make sure you're earning as much interest as you can — and keeping more of it in your own wallet.
A 401k is better for long term investing and retirement planning, whereas a savings account is better for short term liquidity. Your top priorities should be building an emergency fund in savings, and matching your employer contributions in a 401k.
What are the average and median retirement savings? The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000.
In fact, many wealthy people can and do "live off the interest." That is, they put a chunk of their fortune in a relatively safe collection of income-generating assets and live off of that—allowing them to be more adventurous with the rest.
At the current Treasury rate of 4.3%, a $1 million portfolio would generate about $43,000 per year, or roughly $3,500 per month. With your Social Security payments that would generate about $6,000, again enough to live comfortably in most places.
Rich retirees: In the 90th percentile, with net worth starting at $1.9 million, this group has much more financial freedom and is able to afford luxuries and legacy planning.
Spoiler Alert: It's Not As Many As You'd Think
According to the 2022 Survey of Consumer Finances by the Federal Reserve, only about 12% of U.S. households have a net worth over $1 million. This means that the vast majority – 88% – are nowhere near that level.
A high-net-worth individual (HNWI) is a person with typically at least $1 million in liquid financial assets. An ultra-high-net-worth individual has a net worth of more than $30 million.